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Category Archives: Dept of Labor

On March 7, 2019, the U.S. Department of Labor (DOL) published an updated proposed rule which would raise the annual minimum salary requirements related to “white collar” overtime exemptions of the Fair Labor Standards Act (FLSA). The DOL proposes increasing the standard salary level to $679 per week, $35,308 annually. The current standard salary level is $455 per week, $23,660 annually. All employees not paid the new standard salary level will be deemed non-exempt under the FLSA.

The new proposed standard salary
level represents a significant departure from the final rule issued by the DOL
in 2016, which was enjoined by a Texas district court, which sought to increase
the exempt salary threshold to $913 per week, $47,476 annually.

Under the new proposed rule, the
annual compensation to qualify for FLSA’s “highly compensated employee” (HCE) exemption
would increase to $147,414, of which $679 must be paid weekly. Today, to qualify for the HCE exemption, an
employee must be paid at least $100,000, of which $455 must be paid weekly.

The proposed rule allows
employers to include non-discretionary bonuses, incentive payments and
commissions to satisfy up to 10% of the standard salary threshold. The 10% may be paid annually.

The DOL’s proposal does not
include automatic future increases. It
does suggest a commitment to a periodic review every four years subject to the
notice-and-comment rulemaking process.

The DOL does not propose any
changes to the duties test.

The proposed rule is pending
publication in the Federal Register.
Following publication, the public will have 60 days to submit comments
to the DOL.

If you have any questions
regarding the proposed rule and how it may impact your business, please contact
me or another attorney at Lindner & Marsack, S.C.

On August 28, 2018, for the first time in almost ten years, the U.S. Department of Labor’s Wage and Hour Division (DOL) issued two new advisory opinion letters providing employers with guidance on the application of the Family Medical Leave Act (FMLA) to organ donors and a no-fault attendance policy. While the advisory opinion letters are not binding authority or legal precedent, they signal DOL’s interpretation of the law and provide helpful guidance for employers in handing some interesting nuances of the law.

FMLA Protects Organ Donors

In one of the advisory letters, the DOL concluded that organ-donation surgery can qualify as a “serious health condition” under the FMLA, thus entitling an employee with up to 12 weeks of protected leave. This is the case even if the employee was in good health before the donation and voluntarily elected to undergo the surgery. The DOL reasoned that organ-donation surgery may require both “inpatient care” or “continuing treatment” and, therefore, meets the regulatory definitions of a serious health condition. A serious health condition is defined as an illness or physical condition that requires inpatient care at a hospital. Since the typical hospital stay after organ donation surgery is four to seven days, organ donation qualifies as a serious health condition.

No-Fault Attendance Policy under the FMLA

In another letter, the DOL addressed a company’s no-fault attendance policy and found that it did not violate the FMLA. Under the company’s policy, employees accrued points for tardiness and absences, except for certain absences, including FMLA-protected leave. The points remained on an employee’s record for 12 months, and the employer would extend that period for any time the employee was not in “active service,” such as during an FMLA leave.

The DOL concluded that “freezing” an employee’s attendance points while on FMLA leave did not violate the Act by denying a benefit to the employee who took FMLA leave. The DOL reasoned that the FMLA does not entitle an employee to superior benefits because of FMLA leave, and the attendance policy placed the employee in the same position as if he or she had never taken leave. The DOL cautioned, however, that employers must not treat FMLA leave different from other forms of leave. Thus, the employer must “freeze” an employee’s attendance points for all similar types of leave.

This opinion letter highlights, first, that absences necessitated by an FMLA leave cannot be counted under a company’s no-fault attendance policy. Additionally, an employer is not required to remove attendance points from an employee on FMLA leave where the employer has an “active service” component to their policy – as long as the company treats other employees on leave for other reasons the same (i.e., vacation, W.C. leave, etc.).

On August 31, a U.S. District Judge for the Eastern District of Texas struck down the controversial high salary threshold hikes that the Department of Labor under President Obama set for overtime exemptions putting to rest employer concerns about their obligations when or if the Rule was ever implemented. The Rule was to have gone into effect on December 1, 2016, but Judge Amos L. Mazzant III entered a nationwide injunction about a week prior to the effective date of the rule. The Final Rule more than doubled the minimum salary necessary for an employer to consider a particular job (executive, administrative, professional, outside sales) exempt from overtime and significantly increased the salary threshold exemption for highly compensated employees.

While the Obama Administration appealed Judge Mazzant’s injunction to the Fifth Circuit, the Department of Justice under President Trump decided not to pursue the appeal. Instead, the Trump Administration’s Department of Labor is seeking information from the public regarding the exemptions and salary levels and published a Request for Information in late July 2017. Submissions are due on or before September 25, 2017 and request information regarding salary thresholds and the duties test. Details of the request for information and links to submit comments can be found at www.federalregister.gov.

It appears likely that the Trump Administration will still modify the overtime rule, potentially increasing the salary threshold, but the result is not expected to be as generous for workers or as costly to employers.

Lindner & Marsack, S.C. will continue to keep you posted on further developments with changes to the overtime exemptions. For more information about the DOL’s overtime exemption rules or your general employment law needs, please contact Attorney Laurie Petersen at (414) 226-4804 or by email at lpetersen@lindner-marsack.com or any of the other attorneys you work with at Lindner & Marsack, S.C.

Yesterday (November 16, 2016), the U.S. District Court for the Northern District of Texas issued a permanent injunction barring enforcement of the U.S. Department of Labor’s “Persuader Advice Exemption Rule.” As we have reported in previous E-Alerts, this rule would have required employers and their attorneys to report expenditures incurred in resisting union organizing efforts. Historically, reporting was only required when a law firm engaged in active persuader activity such as giving a speech to the employer’s employees in a union organizing drive. Under the new rules, an attorney would be required to report if he or she engaged in speech writing, letter drafting or supervisor training. The rule was unquestionably designed to discourage law firms from representing employers in union organizing campaigns.

In arguing that the law was unlawful, the plaintiffs claimed, in part, that the reporting requirements invaded the attorney-client privilege. The Texas judge issued a preliminary injunction on June 27, 2016. The injunction was made permanent by the decision issued yesterday. The decision will unquestionably be appealed. However, it is unlikely that a decision at the appellate level will be issued before President Elect Trump takes office and a new Secretary of Labor is appointed.

The new requirement was challenged in multiple court cases by business groups and, in a case currently pending in Minnesota, by the Worklaw Network, an association of management-side labor and employment law firms of which Lindner & Marsack is the Wisconsin representative.

Although it is impossible these days to predict anything with certainty, the so-called “Persuader Rule” would appear to be in critical condition and unlikely to be enforced in the foreseeable future, if ever.

Last week, the Department of Labor published a Final Rule regarding implementation of Executive Order 13706, which requires certain federal contractors to provide paid sick leave to their employees. The Final Rule applies to contracts where the solicitation was issued or the contract was awarded on or after January 1, 2017.

Under the Final Rule, applicable federal contractors will be required to provide employees with one hour of paid sick leave for every 30 hours worked on or in connection with a covered federal contract, up to 56 hours. Employees may use paid sick leave for the following reasons:

To care for the employee’s own illness and other health care needs, including preventative health care;

To care for a family member who is ill or needs health care, including preventative health care (the Final Rule takes an expansive view of the types of family relationships that are covered, extending beyond individuals with biological or legal ties to the employee); and

For purposes related to being the victim of domestic violence, sexual assault or stalking, or assisting a family member or loved one who is such a victim.

The four major types of federal contracts that fall under the Final Rule are procurement contracts for construction covered by the Davis-Bacon Act (DBA), service contracts covered by the McNamara-O’Hara Service Contract Act (SCA), concessions contracts, including any concessions contracts excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b), and contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

The Executive Order and Final Rule do not apply to contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the federal government that are subject to the Walsh-Healy Public Contracts Act (PCA). However, where a PCA-covered contract involves a substantial and segregable amount of construction work that is subject to the DBA, employees whose wages are governed by the DBA or the Fair Labor Standards Act (FLSA), including those who qualify for an exemption from the FLSA’s minimum wage and overtime provisions, are covered for the hours spent performing work on or in connection with such DBA-covered construction work.

As to employees working on contracts covered by a collective bargaining agreement (CBA), if the CBA already provided the employee with at least 56 hours of paid sick time per year, then the other requirements of the Executive Order and the Final Rule do not apply to the employee until the date the CBA terminates or January 1, 2020, whichever is first. If the CBA provides less than 56 hours or seven days, in cases where the CBA refers to days rather than hours, the contractor must provide covered employees with the difference between the amount provided under the CBA and 56 hours in a manner consistent with the Executive Order and Final Rule or the terms and conditions of the CBA.

The Final Rule also provides that employees can carry over up to 56 hours of unused paid sick leave from year to year while they work for the same contractor on covered contracts. Further, contractors are required to reinstate employees’ accrued, unused sick leave if the employee returns to work within 12 months after a job separation, unless the employee was paid for unused sick leave upon separation.

Employees can use as little as an hour of paid sick leave at a time. An employee’s request to use paid sick leave may be made orally or in writing. Advance notice can be required where the need for leave is foreseeable, and a contractor can require supporting documentation if the employee is absent three or more consecutive full days.

With less than 90 days before the Department of Labor’s new white collar overtime rules take effect, Wisconsin is among a group of 21 states challenging the Final Rule.

On May 18, 2016, the Department of Labor (“DOL”) issued Final Rules changing the eligibility for overtime for employees falling in the executive, administrative or professional exemptions. The Final Rule more than doubles the minimum salary necessary for an employer to consider a particular job exempt from overtime, increasing the salary threshold from $23,600 to $47,476 annually ($913 per week). In addition, the Final Rule provides for automatic indexing of the minimum salary threshold every three years. This new “salary” test is expected to affect approximately 4.2 million U.S. employees who are currently considered exempt. The Final Rule was set to take effect on December 1, 2016.

The lawsuit, filed yesterday in federal court in Texas, charges that the DOL failed to analyze the type of work that an employee is doing in these exempt classifications and simply determined that the amount of salary received by the employee was the best indicator of whether the employee fit within one of the exemptions. The DOL, the lawsuit claims, failed to consider any changes to the duties tests because those changes would have been “more difficult.” They charge that salary should not be used as a “proxy” for duties and that employees who satisfy the duties portion of the test should still be considered exempt. In addition, the States challenge the automatic indexing because the use of automatic indexing is “without specific Congressional authorization” and is therefore invalid. Instead, if the DOL wants to use automatic indexing, the Plaintiff States say this process should go through the normal administrative agency notice and comment rulemaking process.

In addition, the lawsuit states that the payment of overtime to employees who will no longer be eligible to be considered exempt would force not only state and local governments – but also private employers – to substantially increase labor costs. Unlike private businesses, the Plaintiff States allege that state and local governments have fewer discretionary funds available and therefore have less ability to reduce costs or increase revenue. The result of the Final Rule, they claim, will force state and local governments to reduce or eliminate essential government services and functions.

The Plaintiff States allege that the Final Rule violates the 10th Amendment. The Tenth Amendment, a section of the Bill of Rights, essentially says that any power that is not given to the federal government is given to the people or the states. The States say that compliance with the Final Rule will impair the States’ ability to run their governments because of the huge impact the Final Rule will have on their respective budgets. The States ask the Court to declare the Final Rule invalid. At this point, the Plaintiff States have not sought immediate injunctive relieve preventing the rule from taking effect on December 1, 2016, but perhaps that will come as the deadline draws closer.

Shortly after this lawsuit was filed, the U.S. Chamber of Commerce and fifty different business groups also filed suit in federal court in Texas challenging the Final Rule. The Chamber’s lawsuit also alleges that the Final Rule disqualifies millions of employees from the executive, administrative, and professional employee exemption and that “the new salary threshold is no longer a plausible proxy for the categories exempted from the overtime requirement.” The lawsuit also argues that the automatic update to the salary threshold every three years without rulemaking or seeking input from stakeholders is not authorized under the law.

Lindner & Marsack, S.C. will continue to keep you posted on further developments. However, in the interim, you should proceed as though the Final Rule will take effect on December 1, 2016, so that you are not scrambling or putting your business in jeopardy of running afoul of the Final Rule.

For more information about the DOL’s new overtime exemption rules or your general employment law needs, please contact Attorney Sally Piefer at (414) 226-4818 or spiefer@lindner-marsack.com or any of the other attorneys you work with at Lindner & Marsack, S.C.

The U.S. Department of Labor issued its much-anticipated final overtime exemption rule on May 18, 2016, raising the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (FLSA) “white collar” exemptions to $47,476 per year ($913 weekly). The new salary test will apply to all administrative, professional, executive, outside sales and computer employees who are treated as exempt and salaried under the FLSA. This new rule will affect approximately 4.2 million U.S. workers who are currently treated as exempt, but who would not satisfy the new salary test under the FLSA.

The rule has been a long time coming. The first version of the new rule was proposed in June 2015 and drew approximately 300,000 public comments between June and September 2015. That first version of the rule would have more than doubled the salary threshold from $23,660 per year ($455 weekly) to $50,440 per year ($970 weekly). The final rule just issued still doubles the salary threshold, but reduced the proposed salary threshold by approximately $3,000. The rule will take effect on December 1, 2016.

Under previous regulations, employees had to meet certain tests related to job duties and be paid at least $23,660 per year ($455 weekly) on a salary basis to be exempt from the minimum wage and overtime requirements under the FLSA. While DOL’s final rule raises the salary level significantly, non-discretionary bonuses and incentive payments can now count for up to 10 percent of the new salary level, provided the payments are made at least quarterly. This change has been viewed by some commentators as DOL “throwing employers a bone” in the final rule. In addition, this new salary threshold will be automatically updated every three years to ensure it stays at the 40th percentile benchmark, according to the Obama administration. The final rule also raises the overtime eligibility threshold for “highly compensated” workers from $100,000 annually to $134,004 annually.

Employers have a range of options in responding to the updated standard salary level. For all employees who are currently treated as exempt under the FLSA’s “white collar” exemptions, but who are paid less than $47,476 per year ($913 weekly), the following options exist:

Increase the salary of the employee to at least the new salary level to maintain his or her exempt status;

Convert the salary to an hourly rate and pay the overtime premium (one and one-half times the employee’s regular rate of pay) for all hours worked in excess of 40 hours in a week;

Control, reduce or eliminate overtime hours;

Reduce the amount of pay allocated to base salary (provided that the employee still earns at least the applicable hourly minimum wage) in order to account for overtime hours worked in excess of 40 hours (paying employee time and one-half for all overtime hours), to hold total weekly pay constant; or

Use some combination of these responses.

In determining which course of action to utilize, employers should analyze their workforce and determine which solution best suits their particular needs. For salaried, exempt employees who regularly work overtime and currently earn slightly below the new standard salary level, employers may be best suited to raise the employees’ salaries to the new salary level to retain the “white collar” exemption. For employees who rarely or almost never work overtime hours, employers may be best suited to start treating those employees as non-exempt, pay the employees a standard hourly rate, and pay the overtime premium when necessary.

If you have questions about this material, please contact Oyvind Wistrom by email at owistrom@lindner-marsack.com or by phone at (414) 273-3910, or any other attorney you have been working with here at Lindner & Marsack, S.C.

The U.S. Department of Labor (“DOL”) has issued new guidance reiterating its focus on misclassification of employees as independent contractors and warning employers that “most workers are employees.”

The DOL has asserted that the purpose of its guidance is to provide clear direction to employers regarding the classification of workers as independent contractors. It asserts that employers should apply the multi-factorial “economic realities,” test, which focuses on whether the worker is truly in business for him or herself. Under this test, employers should consider and weigh the following factors: (1) the extent to which the work performed is an integral part of the employer’s business; (2) the worker’s opportunity for profit or loss depending on his/her managerial skill; (3) the extent of the relative investments of the employer and the worker; (4) whether the work performed requires special skills and initiative; (5) the permanency of the relationship; and (6) the degree of control exercised or retained by the employer. The DOL asserts that all of the factors should be considered and weighed together in each case, and that no one factor, such as the control factor, is determinative.

While the guidance does not announce a new standard to be applied in analyzing whether a worker is an employee or independent contractor, it asserts that the application of the economic realities test should be guided by the Fair Labor Standard Act’s definition of the term “employ.” The FLSA provides an expansive scope of the employee-employer relationship by broadly defining the term “employ,” to mean “to suffer or permit to work.” Applying the economic realities test to the broad scope of the employee-employer relationship, the DOL concludes that most workers should be classified as employees under the FLSA.

In light of this guidance, employers should carefully examine their classification of workers to prepare themselves for DOL audits and protect themselves from costly misclassification litigation and liability. Indeed, if it is found that an employer misclassified employees as independent contractors, the financial consequences could include the following: liability for employment withholding taxes, failure to pay tax penalties, minimum wage, overtime compensation, unemployment insurance, workers’ compensation, and ACA penalties for failing to provide minimum essential health-care coverage.

As directed by President Obama in March 2014, the Department of Labor (DOL) has issued a proposed rule regarding the Fair Labor Standard Act’s overtime regulations.

The rule focuses primarily on updating salary and compensation levels. It proposes increasing the standard salary threshold level for exempt employees from $455 a week to approximately $970 a week. This increase would set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers (nationwide) in 2016. While the standard salary level was set at the 20th percentile of weekly earnings for full-time salaried workers in 2004, the DOL states that an increase is necessary to fully account for the simplified duties test that was created in the DOL’s 2004 changes.

The rule also proposes salary increases to the “highly compensated employee” exemption. Currently, the regulations provide an exemption for employees if they earn at least $100,000 in total annual compensation and customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee. The DOL is proposing increasing this figure to $122,148, which would set the salary standard at the 90th percentile of all full-time salaried workers.

Furthermore, the DOL has proposed a mechanism for annually updating the salary and compensation levels going forward. It is considering and is seeking commentary on two possible methodologies: (1) annually updating the thresholds based on a fixed percentile of earnings for full-time salaried workers, or (2) annually updating the thresholds based on changes in the Consumer Price Index for all Urban Consumers (CPI-U).

Despite these drastic changes, the DOL has included a silver lining for employers. The DOL has proposed allowing non-discretionary bonuses and incentive payments, such as bonuses tied to productivity and profitability, to count toward 10% of the standard weekly salary level of $970, for the executive, administrative, and professional exemptions. In order to include the bonuses within the salary, the bonuses would have to be non-discretionary and employees would need to receive the bonuses more frequently than annually (i.e., monthly or quarterly, rather than a yearly “catch-up” payment).

While the DOL is not proposing any specific changes to the standard duties tests, it is seeking commentary to determine whether, in light of the salary level proposal, changes to the duties tests are necessary.

Upon publication of the proposed rule, the public is encouraged to provide commentary through the online portal at www.regulations.gov under Rule Identification Number 1235-AA11. After considering the comments, the DOL will make revisions to its rule and will issue a Final Rule sometime thereafter.

On September 18, 2013 the U.S. Department of Labor (“DOL”) issued Technical Release 2013-04 to address ERISA rights for same-sex spouses after the Supreme Court’s decision in United States v. Windsor, 133 S. Ct. 2675 (2013), invalidated parts of the federal Defense of Marriage Act. Largely consistent with the equivalent discussion from the Internal Revenue Service, Rev. Rul. 2013-17, DOL has stated that it will require that legally married same-sex spouses be treated under ERISA benefit plans in the same manner it has always applied for those in opposite-sex marriages.

The test for being “legally married” is based on the law in the state where the marriage ceremony took place, so, for example, a same-sex couple married in Iowa, New York, or Minnesota is considered legally married for purposes of federal law even if they subsequently live in a state (like Wisconsin) which does not recognize that marriage. For this reason, Wisconsin employers must be alert to the federal rules if any of their employees seek these benefits.

The two same-sex spouses then have all the ERISA rights of an opposite-sex married couple. In ERISA-governed retirement plans, each can be the “surviving spouse” of the other, and ERISA “joint and survivor” spouse benefits must apply to both. When the retirement plan rules require notice to or consent from a spouse (as when a participant designates a beneficiary or selects a joint and survivor retirement benefit), the same-sex spouse has the same rights to be notified and the same power to consent (or not) as the spouse in an opposite-sex marriage. Similarly, a same-sex couple who obtain a legal divorce can utilize a Qualified Domestic Relation Order (“QDRO”) to require that the participant’s same-sex former spouse receives part of the participant’s benefit.

The rules for ERISA welfare plans – including employer-provided health insurance – are somewhat less certain because a welfare plan may exclude a spouse regardless of gender. However, a health plan which only provides employee benefits to a spouse of the opposite sex and excludes a same-sex spouse is an invitation to litigation.

Employers should review their ERISA plan documents and amend those references which would improperly deny spousal benefits to same-sex spouses. Currently, all such references must be updated by December 31, 2013; although there are indications that IRS will extend this deadline, no announcement of that relief has yet been issued.

Should you have any questions about these new requirements and how they are to be enforced, please contact Alan M. Levy, an attorney with Lindner & Marsack who focuses on employee benefits.

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